4 Min Read
LONDON (Reuters) - Drugmaker GlaxoSmithKline (GSK.L) will this week name Philip Hampton, who currently chairs Royal Bank of Scotland (RBS.L), as its next chairman, a person close to the process said on Wednesday.
Hampton is expected to join the GSK board as a non-executive director late this year or early in 2015 and take over from current chairman Chris Gent around the middle of next year.
Reuters reported on Monday that Britain's biggest drugmaker was under pressure to make changes, including a possible early replacement of Gent, after it was hit by a record $489 million fine for bribery in China.
The one-time Vodafone (VOD.L) chief, who has chaired GSK for nine years, is due to retire by the end of 2015 and the company has been planning for his succession for the past two years.
A GSK spokesman declined to comment on Hampton's future role but said: "Succession planning for the chairman is well under way."
Naming a new chairman may be seen as a sign that change is coming at GSK to address shareholder concerns over both the China affair and the company's recent poor financial performance.
As the new chairman, a key long-term task for Hampton will be to find an eventual successor to Chief Executive Andrew Witty, who has been in the job since 2008.
Witty has been viewed as a star manager for much of his six-year tenure but he has been damaged by the China scandal, which forced GSK to make an abject apology to the Chinese people last week.
Investors have become increasingly disillusioned with GSK's management in the past year, following the corruption scandal in China, which hit the group's reputation and its sales in the country, as well as weakness in the vital U.S. market.
The company's shares have lagged badly. While the European healthcare sector .SXDP has risen by around a fifth this year on optimism over new drugs, GSK shares have lost 11 percent as forecasts for its sales and earnings have fallen.
Hampton has been chairman of RBS since 2009 when he was parachuted in to help rescue the bank following its 45 billion pounds ($74 billion) bailout during the financial crisis.
He has previously said that a chairman should typically serve between five and seven years at a listed company and is expected to stay at RBS until a successor is appointed, according to industry sources.
Hampton has led RBS, which is 80-percent owned by the British government, through a turbulent period of transition during which it shed assets worth 1 trillion pounds to rid itself of toxic loans built up during a period of aggressive lending in the run-up to the financial crisis.
However, the bank's attempts to return to health have been held back by the legacy of past misconduct, which included fines of $612 million for the fixing of benchmark interest rates and accusations over how it treated struggling small firms.
Hampton had hoped to oversee the start of RBS's return to full private ownership but that prospect is still seen to be several years away with its shares trading well below the price the government bought them at, leaving taxpayers sitting on a loss of 13 billion pounds.
Before RBS, Hampton chaired supermarket chain Sainsbury (SBRY.L) and was previously group finance director at Lloyds TSB, BT Group, BG Group, British Gas and British Steel.
News of Hampton's pending appointment as chairman was first reported by Sky News.
(1 US dollar = 0.6117 British pound)
Additional reporting by Matt Scuffham; Editing by Keith Weir